Causes of Rising Global Oil Prices

Factors normally attributable to current price increases include new geopolitical concerns in the Middle East, declining oil production capacity, agreed reductions by the Organization of Petroleum Exporting Countries, declines in the US dollar against other most important currencies, emerging markets Increase in demand from, and oil futures market included. Noteworthy expansion of temporary trading. Traders and speculators can benefit from these value changes by trading crude oil CFD (Kanter, 2008).

But what was the cause? Most people accuse the 1973 oil crisis. The Organization of Petroleum Exporting Countries (OPEC) announced the embargo on Western countries. This led to a sharp rise in crude oil prices worldwide, which raised the cost of goods and resulted in an increase in unemployment. Even though the financial crisis of 2007 - 2008 may pose a concern for economic stagnation again, there are few indications that the events of the 1970s will occur again. People are worried that the Fed's monetary policy and parliamentary fiscal policy (including economic stimulus measures) will lead to inflation and high consumption.

Beyond data in the next October, price pressures will rise further. First of all, as the crisis took place in the Middle East, global crude oil prices rose in recent weeks. There is usually a time lag, but there is a possibility that the pump price will rise possibly by the end of November. Furthermore, according to Office data, in the past few months wage increase rate in rural formal sector continues to rise (Figure 6). Wage growth will further increase after the government announces that the lowest subsidy price for rabbin (winter) crops is the highest in the four years in mid-October.

Oil prices rose sharply in the past few years. Despite rising crude oil prices, world economic growth is still strong in all regions of the world and is expected to continue for the next few years. Compared to the past few decades, the impact of crude oil price fluctuations on global economic growth has declined. When oil prices soared between 2003 and 2005, world production decreased by about 5% (EIA, 2008). The impact of oil on growth is amazing. Many companies are forced to adopt new oil prices, change the usage patterns of production factors, and eliminate unprofitable sectors. This will reduce the profitability of the industry. As the government strengthens protectionism on imports and exports, there is also the possibility of causing a global recession due to a decline in real assets. Especially in an economy with many monopolies, significant price fluctuations can occur.